Business Model Implementation of New Ventures: Linking TMT Process Antecedents,Organizational Culture,and Firm Performance

Abstract

How do top management teams (TMTs) play a role in new ventures’ business model implementation? Drawing on group process theory and the organizational culture literature, this study investigates the impact of TMT processes on new ventures’ business model implementation and how organizational culture moderates such relationships. We propose a positive effect of TMT agreement seeking but a negative effect of TMT interpersonal conflict on business model implementation. Furthermore, we theorize that the roles of these two TMT processes are contingent on organizational culture. Specifically, we posit that the benefit of TMT agreement seeking is amplified by flexibility orientation culture but reduced by control orientation culture. Conversely, the harm from TMT interpersonal conflict is weakened by the flexibility orientation culture but amplified by the control orientation culture. Using two waves of matched survey data collected from 896 TMT members in 224 Chinese new technology-based ventures, the results provide strong support for these hypotheses. Our findings yield actionable guidelines for new ventures pursuing business model implementation and superior performance.

Keywords

business model implementation top management team process organizational culture group process theory

Introduction

Recently, new ventures’ business model implementation, which reflects the top managers’ actions to specify business model goals and dynamically monitor progress toward them, is becoming another strategic priority for top management teams (TMTs) alongside business model design and innovation (Brea-Solís et al., 2015; Demil et al., 2015; Verhagen et al., 2021). Both practitioners and scholars have realized that such implementation can determine the success and effectiveness of business models (Brea-Solís et al., 2015; Solaimani et al., 2018). Poor business model implementation leads new ventures to suffer poor performance and even bankruptcy. For example, the digital solutions startup Protonn shut its business within 6 months after raising $9 million in seed funding mainly because the TMT has failed to implement the firm’s business model (CB Insights, 2022). This indicates that implementing business models relies not only on operational managers but also on TMTs (Parry, 2020). TMT members should utilize multiple practices to ensure the business model is suitably implemented (Leih et al., 2015). However, our understanding of how TMTs affect business model implementation is still limited.

In the literature, although scholars have paid attention to the antecedents of business model implementation, few studies have focused on the role of TMTs. Research indicates that business model implementation is influenced by business model experimentation (Verhagen et al., 2021), dynamic capabilities (Teece, 2018), and environmental uncertainty (Solaimani et al., 2018). However, these studies ignore the fact that business model implementation is a strategic action the firm’s top-level executives take to direct the firm’s business model management process, and an effective TMT process is essential to ensure that the firm’s business model is properly implemented (Parry, 2020). According to group process theory, decision implementation is determined by group processes, which refer to interactions among group members (S. G. Cohen & Bailey, 1997; Olson et al., 2007; Shaw, 1981). This indicates that TMT (group) processes, namely, the interactions among TMT members, can affect the implementation of business decisions (e.g., business model) (Leih et al., 2015; Parry, 2020). Leih et al. (2015), for example, argued that business model implementation requires the TMT to overcome conflicts and achieve agreements among TMT members. Although the theory and TMT literature have indicated that an effective TMT process is required to ensure the firm’s business model is properly implemented (Parry, 2020), few studies have empirically explored the impact of different TMT processes on business model implementation.

Group process theory further suggests that the role of group processes depends on the environment in which the group operates (Knight et al., 1999). TMT members operate in a certain organizational culture—“a collection of shared assumptions, values and beliefs that is reflected in organizational practices and goals” (Liu et al., 2010, p. 375)—that may greatly impact the development of TMT members’ consensus formation (Eisend et al., 2016; Wei et al., 2014), thereby altering the role of TMT processes. However, few studies have investigated the moderating role of organizational culture on group processes, which leaves an important research gap in the study of group process theory. To address this research gap, the current study treats organizational culture as a key contextual condition that may moderate the relationship between TMT processes and business model implementation.

Building upon group process theory and the organizational culture literature, we propose that TMT processes impact business model implementation by affecting TMT members’ consensus formation on how to implement their business models and that organizational culture may greatly impact the development of such consensus formation. Specifically, following Knight et al.’s (1999) work, we focus on two key TMT processes, TMT agreement-seeking and interpersonal conflict, since they can effectively reflect the agreement and disagreement within a TMT (Knight et al., 1999), and business model scholars have realized the importance of these two TMT processes in business model implementation (Leih et al., 2015; Parry, 2020). Due to their opposing effects on consensus formation (Jehn, 1997; Parayitam et al., 2010), we propose a positive effect of TMT agreement seeking but a negative effect of TMT interpersonal conflict on business model implementation. Furthermore, according to the key opposite orientations of organizational culture, that is, flexibility orientation and control orientation (Quinn & Rohrbaugh, 1983), we propose that TMT processes will have different effects under flexibility and control orientations that either enhance or impede the level to which TMT members achieve consensus on how to implement their business models.

The findings, based on the analysis of two waves of matched survey data from 896 TMT members in 224 new technology-based ventures in China, provide strong support for our hypotheses. We found that when firms encourage agreement seeking and reduce interpersonal conflict among TMT members, they maximize business model implementation. Furthermore, in high flexibility orientation or low-control orientation cultures, the positive impact of agreement seeking on business model implementation is significantly enhanced, and the negative impact of interpersonal conflict on business model implementation is significantly reduced. Finally, we also found that business model implementation positively impacts firm performance.

Our findings have the following implications for the literature. First, we extend business model understanding by exploring the interface between entrepreneurship and a new venture’s business model implementation. We position business model implementation at the strategic level rather than the operational level. Our business model implementation definition enriches the previous definition and helps researchers understand business model implementation while considering entrepreneurship. Second, our findings have implications for the upper-echelon literature by identifying the impact of TMT processes on business model implementation. We propose and empirically validate that TMT processes, that is, agreement seeking and interpersonal conflict, play vital roles in business model implementation. The findings about the different roles of these two TMT processes help enhance the knowledge about TMT processes in business model implementation. Finally, we extend group process theory by situating the effect of TMT processes within the organizational culture context, thereby broadening the scope of group process research to account for the environment in which the group operates.

Theoretical Foundation and Hypothesis Formulation

Business Model Implementation

The business model refers to an architecture for how a firm creates and delivers value to customers and the mechanisms employed to capture a share of that value (Snihur & Zott, 2020; Teece, 2018; Zott & Amit, 2007, 2008). The evolution of business models involves three stages: design, implementation, and transformation/innovation (Teece, 2018). However, previous business model literature has focused on the design and innovation of business models (Chandler et al., 2014; Foss & Saebi, 2017; George & Bock, 2011; Soluk et al., 2021) and has largely ignored their implementation (Demil et al., 2015). Recently, realizing that such implementation can determine the success and effectiveness of designed business models, both practitioners and scholars have treated business model implementation as another strategic priority alongside business model design and innovation (Brea-Solís et al., 2015; Demil et al., 2015; Hienerth et al., 2011; Verhagen et al., 2021). However, scholarly understanding of this concept remains limited.

The business model implementation is distinct from other types of implementation due to its broader focus and scope. It is about the process of translating a company’s business model into action, encompassing the overall strategic direction (Verhagen et al., 2021). By contrast, other implementations, such as project implementation or technology implementation, are more specific, targeting particular objectives or issues within the organization (Frank et al., 2019; Kutsch et al., 2021). While previous predictions and general implementation principles can provide insights, they need to be adapted and contextualized to effectively implement a specific business model.

Prior studies have attempted to provide a clear definition of business model implementation. For example, Brea-Solís et al. (2015) suggested that business model implementation reflects how firms make particular choices to configure their business model activities. Verhagen et al. (2021) further regarded business model implementation as how firms translate their business models into operating models and enterprise architectures. However, business model implementation is a salient strategic action that a firm’s top managers take to direct the firm’s business model management process (Parry, 2020). Note that these definitions do not adequately consider the concept connotation of implementation, such as the essential strategic actions of top managers to implement their business models.

According to implementation theory, there are two essential actions for implementation: goal specification and goal monitoring (Palfrey, 2002). Specifically, goal specification refers to group members understanding the goals of organizational decisions (Gonzalez-Mulé et al., 2016), and goal monitoring refers to “tracking progress toward goals, assessing what needs to be accomplished for goal attainment, and communicating progress among members” (Rapp et al., 2014, p. 976). For example, Barrick et al. (2015) defined strategic implementation as TMT members’ willingness to specify strategic objectives and to adopt clearly defined metrics to dynamically monitor progress. In line with implementation theory, we focus on actions that demonstrate that TMT members have specified business model goals and are monitoring progress toward them in business model implementation. Based on these arguments, we define business model implementation as TMT members’ actions to specify business model goals and dynamically monitor progress toward them. This definition offers a more nuanced perspective on the process of implementing business models by emphasizing the role of TMT and the strategic aspect of implementation and by acknowledging the ongoing nature of implementation that highlights the need for goal-oriented actions and progress monitoring.

In terms of business model implementation’s antecedents, previous research suggests that it is influenced by business model experimentation (Verhagen et al., 2021), dynamic capabilities (Teece, 2018), and environmental uncertainty (Solaimani et al., 2018). For example, Verhagen et al. (2021) suggested that business model experimentation leads to changes in business model implementation. Teece (2018) argued that the successful implementation of business models depends on the firm’s dynamic capabilities. By viewing business model implementation as the TMT members’ actions to implement their firm’s business models, the antecedents of business model implementation should include a set of TMT characteristics. Indeed, recent research has indicated that business model implementation is significantly influenced by TMT characteristics (Leih et al., 2015; Parry, 2020). Leih et al. (2015), for example, argued that business model implementation requires the TMT to overcome conflicts and achieve agreements among TMT members. In line with group process theory (Shaw, 1981), we postulate that the interactions among TMT members, namely, TMT processes, significantly affect the implementation of the business model as a business decision. However, although TMT processes can theoretically be critical factors influencing business model implementation, their impact on business model implementation lacked empirical support.

Group Process Theory and TMT Processes

Group process theory holds that group processes, which refer to the interactions among group members, affect the decision-making and implementation of groups and enterprises by influencing the degree of consensus formation among its members (Cohen & Bailey, 1997; Knight et al., 1999; Olson et al., 2007; Shaw, 1981). This theory has been widely used to understand how group members make and implement decisions in various group contexts, such as work groups (Ely & Thomas, 2001; Hoon et al., 2019), project groups (Barry and Stewart, 1997; Baysinger et al., 2014), and management groups, especially TMTs (Knight et al., 1999; Olson et al., 2007; Parayitam et al., 2010). Specifically, TMT (group) processes refer to interactions among TMT members (Ling et al., 2008). Previous TMT researchers have examined a variety of TMT processes, such as TMT agreement seeking and interpersonal conflict, and their effect on strategic decision-making (Edmondson et al., 2003), strategic consensus (Knight et al., 1999), and firm outcomes (Mihalache et al., 2014). For example, Knight et al. (1999) argued that TMT processes impact the formation of strategic consensus within the TMT, which is the foundation of effective strategy implementation (Floyd & Wooldridge, 1992). Aligned with group process theory, we expect the extent to which TMTs implement the firm’s business model decisions, namely, business model implementation, to be related to TMT processes.

In the TMT literature, both agreement seeking and interpersonal conflict have been widely regarded as the two key TMT processes (Knight et al., 1999; Parayitam et al., 2010). TMT agreement seeking refers to behavior aimed at reaching an agreement among TMT members (Knight et al., 1999), while TMT interpersonal conflict refers to conflict related to emotional or personal relationships between TMT members (Amason, 1996). Knight et al. (1999), for example, introduced these two processes into TMT research to reflect the agreement and disagreement within a TMT and argued that TMT agreement seeking and interpersonal conflict could greatly impact firms’ effective implementation of business decisions. The business model literature further indicates that TMT agreement seeking and interpersonal conflict may play important roles in business model implementation (Leih et al., 2015; Parry, 2020). For example, Leih et al. (2015) suggested that business model implementation requires TMT members to be able to act in concert and overcome conflicts. Combining these streams, we explore two business model implementation antecedents related to TMT processes, namely, agreement seeking and interpersonal conflict, based on group process theory.

Effects of TMT Processes on Business Model Implementation

In this study, we focus on elaborating the understanding of how TMT agreement seeking and interpersonal conflict impact business model implementation. Specifically, in an agreement seeking TMT, members in the TMT group will work hard to reach an acceptable decision and commit themselves to making it real. In such conditions, agreement seeking fosters consensus formation on the goal specification and progress monitoring of business decisions. Knight et al. (1999), for example, found that TMTs engaging in agreement seeking could improve the similarity of members’ understanding of corporate strategy. Such agreement seeking is essential to develop consensus among TMT members on the implementation of business decisions and thus significantly influences business model implementation.

Based on group process theory, we expect a positive relationship between agreement seeking and business model implementation. Business model implementation requires all TMT members to achieve consensus on their business model goals and define metrics to assess progress in reaching these goals. When TMT members actively engage in agreement seeking, they more easily achieve consensus on their business model goals. Moreover, TMTs engaging in agreement seeking are more committed to achieving their goals (Knight et al., 1999). In this vein, members in these TMTs will invest more effort to monitor events that may influence progress on business model goals, thereby enabling business model implementation.

Hypothesis 1 (H1): Agreement seeking within the TMT positively relates to business model implementation.

The literature indicates that interpersonal conflict has a range of negative consequences for an organization (Cohen et al., 2013; Stenmark & Mumford, 2011). For example, Amason (1996) found that interpersonal conflict reduces the quality of an organization’s decision-making and affective acceptance of it. Knight et al. (1999) found that interpersonal conflict within the TMT could weaken shared cognitions of corporate strategy. Such conflict may result in disagreements about how to implement the business model and thus significantly influence business model implementation.

Contrary to agreement seeking’s correlation with business model implementation, we expect a negative relationship between interpersonal conflict and business model implementation. Interpersonal conflict within the TMT may provoke disagreements about a wide range of business model implementation issues (Barki & Hartwick, 2004; Majchrzak et al., 2012). For example, it may result in disagreements about what the business model should be. In this circumstance, it is not easy for TMT members to achieve consensus on their business model goals. In addition, it is also likely to provoke different cognitions about metrics to assess progress on business model goals (Knight et al., 1999). Without clearly defined metrics, it is difficult for TMT members to regularly monitor how well they are meeting their business model goals, thereby hindering business model implementation.

Hypothesis 2 (H2): Interpersonal conflict within the TMT negatively relates to business model implementation.

The Moderating Role of Organizational Culture

Group process theory further suggests that the role of group processes depends on the environment in which the group operates (Knight et al., 1999). Organizational culture, which refers to “a collection of shared assumptions, values and beliefs that is reflected in organizational practices and goals” (Liu et al., 2010, p. 375), is an important environment in which the TMT operates. It may significantly impact the development of TMT members’ consensus formation on how to implement the firm’s business model (Leih et al., 2015). For example, Leih et al. (2015) suggested that TMT members should establish an organizational culture of openness and knowledge sharing that support the creation of consensus on business model implementation. Therefore, in line with group process theory, we posit that the relationship between TMT processes and business model implementation can be altered through organizational culture.

Although there are various classifications of organizational culture, many scholars tend to focus only on the classification of flexibility-control orientation based on the competing values model (CVM) (Dai et al., 2018; Liu et al., 2010; Shao, 2019). Following this research stream, this study adopts the framework of flexibility-control orientation. According to CVM, organizational cultures are characterized by two sets of values: those that emphasize flexibility and those that emphasize control (Deshpandé et al., 1993; Quinn & Rohrbaugh, 1983). A flexibility orientation culture values spontaneity, innovation, and risk-taking, whereas a control orientation culture values order, stability, and predictability (Khazanchi et al., 2007). These two orientations reflect different assumptions about the role of employees and different approaches that organizations take to manage their employees to achieve their goals (Liu et al., 2010). For example, a flexibility orientation culture assumes that employees are creative problem solvers who can drive innovation, while a control orientation culture assumes that employees need clear rules and procedures to ensure consistency and quality (Büschgens et al., 2013). Therefore, the flexibility-control orientation classification helps scholars understand the underlying values and assumptions that shape an organization’s culture and how it affects firms’ decision-making and implementation. Furthermore, the validity of the measures of flexibility and control orientations has been well examined by previous empirical studies (Dai et al., 2018; Deshpandé et al., 1993; Liu et al., 2010).

Given the different development directions of shared values and beliefs, prior research indicates the different influences of flexibility orientation and control orientation cultures on the group’s consensus formation and thus the effective implementation of strategic choices (Dai et al., 2018; Khazanchi et al., 2007). In this vein, flexibility orientation and control orientation cultures may differently impact the formation of TMT members’ consensus on how to implement their business models, thereby having different moderating roles in the relationship between the two TMT processes (i.e., agreement seeking and interpersonal conflict) and business model implementation.

Specifically, we propose that a high flexibility orientation culture amplifies the positive impact of agreement seeking on business model implementation, while a low flexibility orientation culture weakens this effect. According to group process theory, agreement seeking promotes business model implementation by fostering consensus on business model goals and encouraging TMT members to invest the effort to monitor events toward achieving these goals. When flexibility orientation is high, TMT members are more likely to engage in open communication and be willing to consider diverse viewpoints (Shao, 2019), which makes it easier for TMT members to achieve consensus on business model goals through agreement seeking. Moreover, developing metrics for monitoring progress toward business model goals requires trial and error in practice. Firms with a high flexibility orientation value commitment to the development of the firm (Liu et al., 2010), which can encourage TMT members to invest more effort to dynamically monitor progress toward business model goals. Therefore, a high level of flexibility orientation culture should amplify the advantages of agreement seeking on business model implementation.

By contrast, when flexibility orientation is low, the lack of openness and willingness to consider alternative perspectives within the TMT can impede TMT members from reaching a consensus on business model goals (Fiordelisi & Ricci, 2014), which offsets the advantages of agreement seeking. Moreover, a low flexibility orientation culture may discourage TMT members from actively monitoring and adjusting the implementation process of the business model. Their focus may be more on maintaining stability and following predetermined plans rather than embracing flexibility and learning from feedback (Dai et al., 2018). This lack of dynamic monitoring and adaptation hinders the effective implementation of their business model. Therefore, the impact of agreement seeking on business model implementation may be less pronounced when the flexibility orientation culture is low.

Hypothesis 3 (H3): Flexibility orientation culture positively moderates the impact of agreement seeking within the TMT on business model implementation, with a high flexibility orientation culture strengthening the positive effect and a low flexibility orientation culture weakening it.

We also propose that a high flexibility orientation culture weakens the negative impact of interpersonal conflict on business model implementation, while a low flexibility orientation culture exacerbates this effect. Specifically, when flexibility orientation is high, TMT members are more willing to pursue organizationally valued goals (Stock et al., 2007). Interpersonal conflict’s role in hindering business model implementation is weakened in this situation. For example, a flexibility orientation culture can reduce TMT members’ disagreements about the metrics to assess progress on business model goals. Therefore, although interpersonal conflict generates disagreements among TMT members, a flexibility orientation culture mitigates these disadvantages, thereby enhancing TMT members’ consensus formation on how to implement their business models.

By contrast, when flexibility orientation is low, there is a lack of emphasis on open communication and willingness to pursue organizationally valued goals. As a result, the disagreements arising from interpersonal conflict are more likely to escalate. This escalation makes it more difficult for TMT members to achieve consensus on their business model goals (Bendersky & Hays, 2012). Moreover, interpersonal conflict within the TMT impedes consensus formation on the metrics to assess progress on business model goals. A low flexibility orientation culture exacerbates this negative effect since it is often accompanied by resistance to change and a preference for maintaining the status quo (Dubey et al., 2017). With this orientation, TMT members find it more difficult to adjust the metrics to dynamically monitor progress toward business model goals as the environment changes. Therefore, a low flexibility orientation culture should exacerbate the negative impact of interpersonal conflict on business model implementation.

Hypothesis 4 (H4): Flexibility orientation culture positively moderates the impact of interpersonal conflict within the TMT on business model implementation, with a high flexibility orientation culture weakening the negative effect and a low flexibility orientation culture strengthening it.

Furthermore, we propose that a high-control orientation culture weakens the positive effect of agreement seeking on business model implementation, while a low-control orientation culture amplifies this effect. Specifically, when a TMT engages in agreement seeking, it is easy for TMT members to make the decision on how to assess progress on business model goals. However, metrics for monitoring progress toward business model goals are probably improved through trial and error. Firms with a high-control orientation culture are more inclined to maintain stability (Khazanchi et al., 2007), which makes it difficult to adjust the metrics to dynamically monitor progress toward business model goals as the environment changes. Therefore, a high level of control orientation culture can mitigate the advantages of agreement seeking on business model implementation.

By contrast, a low-control orientation culture puts greater emphasis on empowering TMT members and granting them autonomy in decision-making (Fiordelisi & Ricci, 2014). When TMT members engage in agreement seeking, this sense of empowerment motivates TMT members to express their perspectives, contribute to discussions, and actively participate in forming shared business model goals. In addition, a low-control orientation culture promotes adaptability in response to the changing environment (Shao, 2019). With this orientation, the TMT members engaging in agreement seeking are more likely to embrace a flexible mindset that allows for adjustments to the metrics of dynamically monitoring progress toward business model goals. Therefore, a low-control orientation culture strengthens the positive effect of agreement seeking on business model implementation.

Hypothesis 5 (H5): Control orientation culture negatively moderates the impact of agreement seeking within the TMT on business model implementation, with a high-control orientation culture weakening the positive effect and a low-control orientation culture strengthening it.

We also propose that a high-control orientation culture exacerbates the negative impact of interpersonal conflict on business model implementation, while a low-control orientation culture mitigates this effect. A high-control orientation culture strongly emphasizes centralized decision-making and adherence to established rules and procedures (Liu et al., 2010). With this orientation, when interpersonal conflicts arise within the TMT, team members may be more hesitant to express their disagreements due to a perception that dissenting views are not welcomed (Parayitam et al., 2010). This suppression of communication limits open dialogue and prevents consensus formation about business model goals. Furthermore, a high-control orientation culture is often associated with resistance to change or deviation from established norms and practices (Shao, 2019). In such a culture, when interpersonal conflict arises within the TMT, team members are more reluctant to consider alternative perspectives or adapt to new ideas (Liu et al., 2015). This resistance to change makes it more difficult for TMT members to achieve consensus on the progress monitoring of business model goals. Therefore, a high-control orientation culture is expected to exacerbate the negative effect of interpersonal conflict on business model implementation.

By contrast, in a low-control orientation culture, there is an emphasis on open communication and dialogue (Dai et al., 2018). Even if interpersonal conflicts arise within the TMT, team members feel more comfortable expressing their concerns and differing viewpoints, engaging in constructive discussions in such a culture. This open communication facilitates consensus formation on their business model goals. Moreover, a low-control orientation culture values adaptability in response to challenges or changing environments (Dubey et al., 2017). With this orientation, although interpersonal conflicts still occur within the TMT, team members are more inclined to seek innovative solutions and adapt their approaches to move forward. This adaptability enables the TMT to more easily achieve consensus on the progress monitoring of business model goals. Therefore, a low-control orientation culture should mitigate the negative effect of interpersonal conflict on business model implementation. Figure 1 presents our conceptual model.

Figure 1.

Conceptual model.

Hypothesis 6 (H6): Control orientation culture negatively moderates the impact of interpersonal conflict within the TMT on business model implementation, with a high-control orientation culture exacerbating the negative effect and a low-control orientation culture mitigating it.

Methodology

Sample and Data

We collected survey data from new technology-based ventures operating in the Yangtze River Delta. This delta is one of the most active and fastest-growing economies in China, accounting for approximately 20% of China’s national GDP.¹ Specifically, to be classified as new technology-based ventures, firms should meet two criteria in China: (a) established within 10 years (e.g., Ferguson et al., 2016; Xie et al., 2020) and (b) recognized as technology-based firms by the Chinese government. To obtain a representative sample, 1,000 new technology-based ventures were randomly selected from a list offered by local administrative institutions that administer business incubators and industrial parks in this area. The sampled firms cover a variety of industry types, such as the manufacturing industry, wholesale and retail industry, and software and information technology service industry.

We collected data in two waves 1 month apart. In Wave 1 (November 2022), we invited each company’s four top managers to participate in our offline survey. Three top managers (administration managers, marketing managers, and operations managers) were asked to answer questions regarding agreement seeking and interpersonal conflict within the TMT. Their ratings of agreement seeking and interpersonal conflict were averaged within each firm. We also asked each company’s CEO to answer questions regarding organizational culture since CEOs have a good understanding of their firms’ culture; this also reduced the risk of common method bias. We obtained a sample of 249 firms after merging the responses from 263 entrepreneurs, 264 top executive managers, 260 marketing managers, and 254 operations managers in Wave 1. In Wave 2 (January 2023), we collected information on business model implementation from the CEO following the same process as in Wave 1 because CEOs are familiar with their TMTs’ implementation of business models. Again, this reduced the risk of common method bias. The final sample contains 224 firms, representing a response rate of 22.4%. Table 1 displays our sample demographics. Considering nonresponse bias, we conducted early-late respondent analysis according to the CEO’s response time using a t-test. The results revealed no significant difference in the variables firm size (p = 0.79), firm age (p = 0.37), industry (p = 0.54), gender diversity (p = 0.56), age diversity (p = 0.76), education diversity (p = 0.83), cognitive diversity (p = 0.96), agreement seeking (p = 0.19), interpersonal conflict (p = 0.30), flexibility orientation (p = 0.17), control orientation (p = 0.60), and business model implementation (p = 0.45). Thus, nonresponse bias was not a serious concern in this study.

Table 1.

Sample Demographics (N = 224).

	N	Percentage (%)
Firm age
<3	105	46.88
3–5	73	32.59
6–10	46	20.54
Firm size
<20	153	68.30
20–49	49	21.88
50–99	14	6.25
100–200	8	3.57
Industry*
Manufacturing	10	4.46
Wholesale and retail	17	7.59
Software and IT services	73	32.59
Scientific research and technical services	108	48.21
Other industry	16	7.14

The classification of the industry is consistent with the Chinese industrial classification for national economic activities.

Measures

We reviewed the current literature to identify scales on the variables involved and adapted them to this research context. A five-point Likert scale was used to measure each survey item of the questionnaire. We invited two academics with expertise in business research to evaluate our questionnaire design, and it was improved based on their comments. Finally, we pilot-tested the questionnaire with 30 senior managers and modified the survey instrument according to their feedback. Table 2 displays the survey items and their validity assessments.

Table 2.

Survey Items and Confirmatory Factor Analysis Results.

Construct and items	Standardized loading
Agreement seeking (Cronbach’s α = 0.92; ICC (1) = 0.47; ICC (2) = 0.73; CR = 0.94; AVE = 0.73)
1. TMT decisions are not final until all the members agree that the decision is acceptable to them	0.85
2. Every TMT member’s input is incorporated into the most important company decisions	0.89
3. The TMT members believe that taking more time to reach a consensus on a strategic decision is generally worth it	0.87
4. When final decisions are reached, no TMT members are unhappy with the decision.	0.84
5. All TMT members are committed to achieving the company’s goals	0.85
6. When making decisions, the TMT members work hard to reach a decision	0.83
Interpersonal conflict (Cronbach’s α = 0.94; ICC (1) = 0.37; ICC (2) = 0.64; CR = 0.96; AVE = 0.85)
1. The TMT members get along well together very well (reverse coded)	0.86
2. The TMT members are always ready to cooperate and help each other (reverse coded)	0.93
3. The TMT members really stick together (reverse coded)	0.94
4. Relationships between TMT members are positive and rewarding (reverse coded)	0.95
5. Relationships between TMT members are best described as “win–lose”; if he/she wins, I lose*	0.26
Business model implementation (Cronbach’s α = 0.92; CR = 0.94; AVE = 0.72) The TMT:
1. Ensures each team member clearly understands our business model goals	0.83
2. Ensures the future direction of the business model is clearly communicated to all team members	0.86
3. Links senior management team goals with the business model direction of the organization	0.87
4. Relies on clearly defined metrics to assess progress on business model goals	0.84
5. Seeks timely feedback from stakeholders about how well the team is meeting business model goals	0.87
6. Regularly monitors how well we are meeting our business model goals	0.83
Flexibility orientation organizational culture (Cronbach’s α = 0.91; CR = 0.94; AVE = 0.79)
1. The glue that holds our organization together is loyalty and tradition. Commitment runs high.	0.90
2. Our organization is a very dynamic and entrepreneurial place. People are willing to stick their necks out and take risks.	0.89
3. The glue that holds our organization together is commitment to innovation and development. There is an emphasis on being first with products and services.	0.89
4. Our organization emphasizes growth through developing new ideas. Generating new products or services is important.	0.87
Control orientation organizational culture (Cronbach’s α = 0.75; CR = 0.85; AVE = 0.60)
1. The glue that holds our organization together is formal rules and policies. Following rules is important.	0.68
2. Our organization emphasizes permanence and stability. Efficiency is important.	0.82
3. Our organization is a very production-oriented place. People are concerned with getting the job done.	0.75
4. Our organization emphasizes outcomes and achievement. Accomplishing goals is important.	0.83
Firm performance (Cronbach’s α = 0.87; CR = 0.91; AVE = 0.72)
Over the past 3 years, we have performed better than our key competitors in:
1. Return on investment	0.86
2. Profits as a percentage of sales	0.88
3. Net income before tax	0.89
4. Cash flow from operations	0.77
TMT cognitive diversity (Cronbach’s α = 0.96; ICC (1) = 0.55; ICC (2) = 0.83; CR = 0.97; AVE = 0.89)
To what extent the TMT members differed in:
1. Their way of thinking	0.95
2. Their knowledge and skills	0.93
3. How they viewed the word	0.94
4. Their beliefs about what is right and wrong	0.96
Attitude toward the color blue (Cronbach’s α = 0.90; CR = 0.93; AVE = 0.78)
1. Blue is a beautiful color	0.89
2. Blue is a pleasant color	0.88
3. I think blue is a pretty color	0.91
4. I like the color blue	0.84
Search effort^a (Cronbach’s α = 0.85; CR = 0.91; AVE = 0.71)
When searching for information, the TMT members would:
1. Invest a great deal of effort into gathering potentially valuable information	0.75
2. Devote a large percentage of time to searching for information	0.91
3. Make looking for new information a top priority for how they would spend their time	0.87
4. Go out of their way to find information sources that may have relevant information	0.83
Search persistence^a (Cronbach’s α = 0.86; CR = 0.91; AVE = 0.71)
When searching for information, the TMT members would:
1. Continue searching until they were satisfied that they had identified all relevant information	0.81
2. Persist until they found all the information pertaining to this problem	0.86
3. Take as much time as needed to identify all available information	0.87
4. Exhaustively search and study every possibility	0.83

Item eliminated during scale purification.

Variables used as instruments for the assumed endogenous variable.

AVE = average variance extracted; CR = composite reliability; ICC = intraclass correlation; TMT = top management team.

TMT Processes

The measurement items for TMT processes, including agreement seeking and interpersonal conflict, were adapted from Knight et al. (1999). Specifically, agreement seeking was assessed relative to the behavior aimed at reaching an agreement among TMT members, which included six items, such as “the TMT members work hard to reach a decision.” The five interpersonal conflict items capture the conflict related to emotional or personal relationships between TMT members. The items included “the TMT members truly stick together.” We then conducted reverse coding. The ratings of three TMT members were averaged within each firm to obtain an aggregate rating for agreement seeking (intraclass correlation [ICC] (1) = 0.47; ICC (2) = 0.73), with a Cronbach’s alpha of 0.92, and for interpersonal conflict (ICC (1) = 0.37; ICC (2) = 0.64), with a Cronbach’s alpha of 0.94.

Business Model Implementation

Since we define business model implementation as the TMT members’ actions to specify business model goals and dynamically monitor progress toward them, the measurement of business model implementation should clearly match this definition. To ensure that participants have a correct understanding of business model implementation items, we provide the following statements about business models in the questionnaire’s cover letter:

A business model refers to an architecture for how a firm creates and delivers value to customers and the mechanisms employed to capture a share of that value. It usually includes the firm’s operating model (e.g., key customer segments, product/service development, and distribution system) and profit model (e.g., cost structure and revenue streams). For example, the business model of Beijing Xiaoju Technology Co., Ltd. is to integrate drivers and passengers through the ride-hailing app Didi to save passengers’ time, reduce the driver’s empty car rate (operating model), and make a profit by taking a certain percentage of commission from each order. (profit model)

Furthermore, following prior studies on implementation (e.g., Barrick et al., 2015), we treated business model implementation as a process rather than an outcome. We shifted the focus from the final result to the essential actions and steps involved in implementing the business model. This focus requires breaking down the implementation process into sequential actions and establishing mechanisms to evaluate the progress of implementation. Aligned with implementation theory and our definition of business model implementation, we measure it with two essential sequential actions: specifying business model goals (goal specification) and dynamically monitoring progress toward them (goal monitoring). Specifically, CEOs in each firm rated the level to which TMT members implemented their firm’s business models using six items based on the measures of team goal specification and monitoring in Gonzalez-Mulé et al. (2016) and Rapp et al. (2014). We revised the original items to emphasize the TMT member’s actions in specifying business model goals and dynamically monitoring progress toward them (listed in Table 2).

Organizational Culture

The measurement items for flexibility orientation and control orientation culture were adopted from Liu et al. (2010). Flexibility orientation culture was assessed using four items related to the firm’s emphasis on creativity, spontaneity, and risk-taking. Control orientation culture was assessed based on the firm’s emphasis on order, predictability, and efficiency, with four items covering ideas such as that following rules is important in the firm.

Control Variables

This study controlled for the firm’s age, size, industry, and TMT diversity, all of which might impact business model implementation and firm performance (Palmié et al., 2021; Teece, 2018; Verhagen et al., 2021). The firm age was calculated as 2022 minus the year the company was founded. Firm size was calculated by the logarithm of the number of employees. In addition, we used four dummy variables to control for industry: Industry 1 represents the manufacturing industry; Industry 2 represents the wholesale and retail industry; Industry 3 represents the software and information technology service industry; and Industry 4 represents the scientific research and technical service industry, with other industries as the baseline group. TMT diversity includes the TMT members’ gender, age, education, and cognitive diversity. Specifically, gender diversity and education diversity were calculated using Herfindahl’s index. The calculation formula is $1 - \sum p_{k}^{2}$ , where p represents the percentage of TMT members in the kth category. Age diversity was calculated by the standard deviation of the TMT members’ age. The measurement items for cognitive diversity were adopted from Van der Vegt and Janssen (2003). TMT members in each firm rated the level of the TMT’s cognitive diversity using four items. Their ratings were averaged within each firm to obtain an aggregate rating for cognitive diversity (ICC (1) = 0.55; ICC (2) = 0.83), with a Cronbach’s α of 0.96.

Analysis and Results

Measure Validation

We conducted several analyses to test the measures’ reliability and validity. First, the results of Table 2 reveal that each construct has good reliability since all Cronbach’s α and composite reliability scores are above 0.70 (Lance et al., 2006). Second, the results of confirmatory factor analysis demonstrate satisfactory fit indices (χ²/df = 983.79/443 = 2.22, comparative fit index = 0.96, normed fit index = 0.93, incremental fit index = 0.96, root mean square error of approximation = 0.07, standardized root mean square residual = 0.05), indicating that convergent validity is acceptable. Third, the results of Table 2 and Table 3 reveal good discriminant validity, with all average variance extracted (AVE) scores above 0.50 and all square roots of AVEs higher than the correlations between constructs (Fornell & Larcker, 1981).

Table 3.

Descriptive Statistics and Correlations.

Variable	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
1. Agreement seeking	.85	−.69	.35	.28	.24	.05	.05	−.05	−.04	−.01	.07	.07	.10	.08	−.05	.12
2. Interpersonal conflict	−.69	.92	−.36	−.33	−.27	−.20	−.13	−.03	−.04	.02	.03	−.07	−.10	−.10	.11	−.14
3. Business model implementation	.35	−.36	.85	.53	.45	.09	.05	−.04	−.08	−.06	.05	.04	.08	.08	−.06	.48
4. Flexibility orientation	.28	−.33	.53	.89	.47	.13	.00	.06	−.06	.02	−.05	.05	.09	.07	−.08	.23
5. Control orientation	.24	−.27	.45	.47	.77	.14	.06	.00	−.03	.05	−.05	.00	.01	.12	.00	.27
6. Firm size	.05	−.20	.09	.13	.14	—	.30	−.06	.01	.02	−.09	.19	−.02	.04	−.07	.04
7. Firm age	.05	−.13	.05	.00	.06	.30	—	−.08	.17	.02	−.11	.19	.00	−.05	−.01	.07
8. Industry 1^a	−.05	−.03	−.04	.06	.00	−.06	−.08	—	−.06	−.15	−.21	.05	.09	−.06	.02	.06
9. Industry 2^a	−.04	−.04	−.07	−.06	−.03	.01	.17	−.06	—	−.20	−.28	−.13	.00	−.09	−.11	−.10
10. Industry 3^a	−.01	.02	−.06	.02	.05	.02	.02	−.15	−.20	—	−.67	−.13	−.18	−.03	−.03	−.01
11. Industry 4^a	.07	.03	.05	−.05	−.05	−.09	−.11	−.21	−.28	−.67	—	.13	.18	.14	.07	−.01
12. Gender diversity	.07	−.07	.04	.05	.00	.19	.19	.05	−.13	−.13	.13	—	.23	.16	−.05	−.02
13. Age diversity	.10	−.10	.08	.09	.01	−.02	.00	.09	.00	−.18	.18	.23	—	.21	.02	.06
14. Education diversity	.08	−.10	.08	.07	.12	.04	−.05	−.06	−.09	−.03	.14	.16	.21	—	−.02	−.01
15. Cognitive diversity	−.05	.11	−.05	−.08	.00	−.07	−.01	.02	−.11	−.03	.07	−.05	.02	−.02	.94	.04
16. Firm performance	.12	−.14	.48	.23	.27	.04	.07	.06	−.10	−.01	−.01	−.02	.06	−.01	.04	.85
17. Marker variable	.12	−.17	.31	.32	.43	.17	.06	.04	.07	−.02	−.04	.10	.01	.13	.0003	.08
Mean	4.44	1.37	4.45	4.52	4.34	1.11	3.29	0.04	0.08	0.33	0.48	0.31	3.79	0.31	3.28	4.06
SD	0.51	0.45	0.61	0.65	0.61	0.40	2.61	0.21	0.27	0.47	0.50	0.19	2.58	0.23	1.33	0.81

Note. Absolute values of the correlations above 0.13 indicate statistical significance at p < .05 (two-tailed tests). Unadjusted correlations are below the diagonal; correlations adjusted for the common method are above the diagonal. The diagonal elements (i.e., italicized values) are the square roots of the AVEs.

Dummy variable.

Common Method Bias

To minimize common method bias, we invited multiple informants to collect data on different variables at two time periods (Chang et al., 2010). We further used the method variance (MV) marker method to assess this bias (Lindell & Whitney, 2001). Specifically, we chose attitude toward the color blue (Miller & Simmering, 2022; Cronbach’s α = 0.90) as the MV marker because it has proven to be an ideal marker variable in a wide variety of social science research, and it is theoretically unrelated to at least one variable in this study. The minimum positive correlation (r = 0.0003) between CEOs’ attitudes toward the color blue and TMT members’ cognitive diversity was used to adjust the construct correlations. The results of Table 3 reveal that after adjustment, all significant correlations between latent variables remain unchanged. Hence, common method bias is not a serious concern in this study.

Hypothesis Testing

We tested our model with hierarchical regression analysis. To reduce concerns about multicollinearity, we standardized all hypothesized variables. The results show that multicollinearity was not serious because the highest variance inflation factor score is 4.64, which is below the threshold of 5.

H1 and H2 proposed that agreement seeking relates positively to business model implementation and that interpersonal conflict relates negatively to business model implementation. The results of Table 4 for Model 2 show that before including organizational culture, agreement seeking has a significant positive influence on business model implementation (β = 0.19, p < 0.05) and interpersonal conflict exerts a significant negative influence on business model implementation (β = −0.21, p < 0.05). However, the results of Table 4 for Model 3 show that after including organizational culture, the positive impact of agreement seeking (β = 0.12, p > 0.05) and the negative impact of interpersonal conflict (β = −0.01, p > 0.05) become insignificant. Hence, H1 and H2 are partially supported.

Table 4.

Regression Results of the Moderating Effect of Organizational Culture.

	Business model implementation
	Model 1	Model 2	Model 3	Model 4
Controls
Firm size	0.06	0.01	−0.04	−0.04
Firm age	0.05	0.02	0.03	0.002
Industry 1	−0.12	−0.12	−0.12	−0.10
Industry 2	−0.19*	−0.19*	−0.14	−0.09
Industry 3	−0.23	−0.23	−0.20	−0.13
Industry 4	−0.18	−0.19	−0.12	−0.06
Gender diversity	−0.04	−0.04	−0.02	−0.02
Age diversity	0.08	0.05	0.03	0.02
Education diversity	0.06	0.03	−0.01	−0.05
Cognitive diversity	−0.07	−0.03	−0.02	−0.02
Direct effect variables
Agreement seeking (AS)		0.19*	0.12	0.08
Interpersonal conflict (IC)		−0.21*	−0.10	−0.13
Flexibility orientation (FO)			0.35***	0.41***
Control orientation (CO)			0.24***	0.19**
Interactions
AS × FO				0.39**
IC × FO				0.42**
AS × CO				−0.29**
IC × CO				−0.24*
R²	0.04	0.18	0.39	0.44
Adjusted R²	0.02	0.13	0.35	0.39
F	0.96	3.74***	9.64***	8.88***
ΔF	0.96	16.91***	37.31***	4.16**

Note. *p < .05. **p < .01. ***p < .001. N = 224.

H3 and H4 predicted that flexibility orientation culture strengthens the positive relationship between agreement seeking and business model implementation and weakens the negative relationship between interpersonal conflict and business model implementation. The results of Table 4 for Model 4 show that the interaction between flexibility orientation culture and agreement seeking has a significant positive influence on business model implementation (β = 0.39, p < 0.01), and the interaction between flexibility orientation culture and interpersonal conflict exerts a significant positive impact on business model implementation (β = 0.42, p < 0.01). Hence, H3 and H4 are supported.

H5 and H6 predicted that a control orientation culture weakens the relationship between agreement seeking and business model implementation and strengthens the relationship between interpersonal conflict and business model implementation. The results of Table 4 for Model 4 show that the interaction between control orientation culture and agreement seeking has a significant negative influence on business model implementation (β = −0.29, p < 0.01), and the interaction between control orientation culture and interpersonal conflict exerts a significant negative impact on business model implementation (β = −0.24, p < 0.05). Hence, H5 and H6 are supported.

To extend the interpretations, we also plot the moderating effects of flexibility orientation and control orientation cultures in Figures 2 to 5. The slopes were plotted using one standard deviation above and below their means (Liu et al., 2010). Figure 2 shows that agreement seeking has a significant, positive effect on business model implementation under high flexibility orientation (β = 0.29, p < 0.001) but a nonsignificant effect under low flexibility orientation (β = −0.19, p > 0.05). Figure 3 shows that interpersonal conflict has a significant, positive effect on business model implementation under high flexibility orientation (β = 0.18, p < 0.05) but a significant, negative effect under low flexibility orientation (β = −0.34, p < 0.01). These results confirmed the positive moderating effects of flexibility orientation in H3 and H4. Similarly, the negative moderating effects of control orientation in H5 and H6 are also confirmed, as presented in Figures 4 and 5. Specifically, Figure 4 shows that agreement seeking has a nonsignificant effect on business model implementation under high-control orientation (β = −0.12, p > 0.05) but a significant, positive effect under low-control orientation (β = 0.22, p < 0.05). Figure 5 shows that interpersonal conflict has a significant, negative effect on business model implementation under high-control orientation (β = −0.22, p < 0.01) but a nonsignificant effect under low-control orientation (β = 0.06, p > 0.05).

Figure 2.

Moderating effect of flexibility orientation on the agreement-seeking–business model implementation link.

Figure 3.

Moderating effect of flexibility orientation on the interpersonal conflict–business model implementation link.

Figure 4.

Moderating effect of control orientation on the agreement-seeking–business model implementation link.

Figure 5.

Moderating effect of control orientation on the interpersonal conflict–business model implementation link.

Further Analysis

To verify the importance of business model implementation, we perform further analysis to investigate the relationship between business model implementation and firm performance. We asked each company’s marketing managers to answer questions regarding firm performance using the scale from Liu et al. (2016) in Wave 2 data collection. The four firm-performance items capture a firm’s performance compared with its key competitors over the past year, such as return on investment, profits, and net income. As shown in the results of Table 5, business model implementation has a significant positive influence on firm performance (β = 0.50, p < 0.001).

Table 5.

Regression Results of the Effect of Business Model Implementation on Firm Performance.

	Firm performance
	Model 1	Model 2
Controls
Firm size	0.02	−0.004
Firm age	0.10	0.08
Industry 1	0.001	0.06
Industry 2	−0.21*	−0.11
Industry 3	−0.15	−0.04
Industry 4	−0.16	−0.07
Gender diversity	−0.08	−0.06
Age diversity	0.08	0.05
Education diversity	−0.01	−0.05
Cognitive diversity	0.02	0.04
Direct effect variables
Agreement seeking		−0.05
Interpersonal conflict		0.003
Flexibility orientation		−0.07
Control orientation		0.08
Business model implementation		0.50***
R²	0.04	0.27
Adjusted R²	0.01	0.21
F	0.87	5.06***
ΔF	0.87	12.94***

Note. *p < .05. **p < .01. ***p < .001. N = 224.

Endogeneity

We used three methods to reduce potential issues of endogeneity since it is a growing concern among entrepreneurship theorists (Anderson et al., 2022). The first concern deals with measurement errors. We identified scales on the constructs involved in the current study and adapted them to this research context to mitigate this concern (Liu et al., 2022). The results of the measures’ reliability and validity analysis proved that these scales are reliable and validated. Moreover, nonresponse bias and common method bias were also shown not to be serious concerns in this study. The second concern focuses on omitted variables. To alleviate this possibility, we included a rich set of control variables (i.e., firm’s age, size, industry, and TMT members’ gender, age, education, and cognitive diversity) in our hypothesis testing analysis and further analysis, as discussed earlier (Hill et al., 2021). The third concern involves reverse causality between TMT processes and business model implementation. To reduce this concern, we established temporal order by measuring TMT processes at time T and measuring business model implementation at time T + 1, a month later (Bamberger et al., 2021). We further employed two-stage least squares (2SLS) estimation procedure with instrumental variables (e.g., Liu et al., 2022).

To perform the 2SLS testing between TMT processes and business model implementation, we first identified the TMT search effort as an instrumental variable for agreement seeking, and the TMT search persistence as an instrumental variable for interpersonal conflict. These variables were chosen based on their significant association with TMT processes (Narayan et al., 2021) while having no theoretical relationship with business model implementation. Specifically, TMT search effort refers to the amount of time and energy TMT members allocate toward search activities, and TMT search persistence refers to the degree to which TMT members continue gathering information despite finding multiple alternatives, to ensure a thorough evaluation of optimal outcomes (Li et al., 2013). We asked each company’s CEOs to answer questions regarding TMT search effort and search persistence, employing scales from Li et al. (2013).

According to the findings presented in Table 6, Model 1 demonstrates that the regression of the TMT search effort and control variables on agreement seeking yields an R² value of 0.25. This value is significantly greater than the R² value obtained from the regression of control variables on agreement seeking (ΔR² = 0.22, ΔF-value = 61.74, p < 0.001). These results reveal that TMT search effort serves as a valid instrumental variable for agreement seeking in this study. Similarly, the outcomes from Model 2 in Table 6 reveal that the regression of TMT search persistence and control variables on interpersonal conflict produces an R² value of 0.16. Notably, this value is significantly higher than the R² value obtained from the regression of control variables on interpersonal conflict (ΔR² = 0.08, ΔF-value = 21.09, p < 0.001), indicating TMT search persistence is a valid instrumental variable for interpersonal conflict in this study.

Table 6.

2SLS Model Testing for Endogeneity between TMT Processes and Business Model Implementation.

	Agreement seeking	Interpersonal conflict	Business model implementation
	Model 1 (OLS)	Model 2 (OLS)	Model 3 (2SLS)
Controls
Firm size	0.04	−0.18	−0.04
Firm age	0.06	−0.09	−0.01
Industry 1	−0.02	−0.02	−0.13
Industry 2	0.05	−0.004	−0.19
Industry 3	0.04	0.08	−0.22
Industry 4	0.01	0.09	−0.18
Gender diversity	0.08	0.004	−0.03
Age diversity	0.05	−0.07	0.01
Education diversity	0.01	−0.11	−0.004
Cognitive diversity	−0.03	0.10	0.001
Direct effect variables
Search effort^a	0.49***
Search persistence^a		−0.29***
Agreement seeking			0.15*
Interpersonal conflict			−0.21*
R²	0.25	0.16	0.10

^aVariables used as instruments for the assumed endogenous variable.

*p < .05. **p < .01. ***p < .001. N = 224.

As we present in Table 6 for Model 3, the predicted value of agreement seeking has a positive and significant impact on business model implementation (β = 0.15, p < 0.05), but the predicted value of interpersonal conflict has a negative and significant impact on business model implementation (β = −0.21, p < 0.05). These findings align with our results. Therefore, our results are robust and unlikely to be unduly influenced by endogeneity issues.

Discussion

This study endeavors to comprehend the effect of TMT processes on new ventures’ business model implementation and the moderating role of organizational culture on this effect. Specifically, based on group process theory and the organizational culture literature, we frame a research model that investigates how TMT agreement seeking and interpersonal conflict impact business model implementation, which is contingent on the new ventures’ organizational culture, as well as the role of business model implementation on firm performance. Our results offer new insights into the emerging research on business model implementation.

First, we found a positive effect of agreement seeking but a negative effect of interpersonal conflict on business model implementation, which is consistent with the argument that these two TMT processes play opposite roles in influencing the implementation of business decisions (Knight et al., 1999; Parayitam et al., 2010). The findings indicate that the pursuit of agreement seeking and interpersonal conflict reduction within the TMT can be effective ways for new ventures to enhance their business model implementation.

Second, our findings reveal the opposite moderating roles of flexibility orientation and control orientation cultures. Specifically, we confirmed that the positive effect of TMT agreement seeking is amplified by flexibility orientation culture but weakened by control orientation culture. Conversely, the negative effect of TMT interpersonal conflict is weakened by the flexibility orientation culture but amplified by the control orientation culture. These results not only confirm the viewpoint that consensus formation by TMT processes is mainly dependent on organizational culture but also resonate with previous literature about the different moderating roles of flexibility orientation and control orientation cultures (Liu et al., 2016; Wei et al., 2014).

Third, the results revealed that business model implementation positively impacts new ventures’ performance, which reinforces the viewpoint that “the effectiveness of a particular business model depends not only on its design but also on its implementation” (Brea-Solís et al., 2015, p. 13). This result highlights the necessity for managers of new ventures not only to design a reasonable business model but also to effectively manage the process of implementing their business models to achieve superior performance.

Implications for Theory

This study makes three primary theoretical contributions to the literature. First, we extend business model understanding by exploring the interface between entrepreneurship and a new venture’s business model implementation. Demil et al. (2015) highlighted that one of the contributions that business model research makes to entrepreneurship research is emphasizing the importance of business model implementation. We acknowledge that this study is not the first to posit that business model implementation matters to the success of a firm, since prior scholars have reported evidence supporting the role of business model implementation on various organizational outcomes (Brea-Solís et al., 2015; Solaimani et al., 2018; Verhagen et al., 2021). Although these studies have inspired interest and laid the foundations of business model implementation research, we believe that our study has moved this research topic forward by positioning business model implementation at the strategic level rather than the operational level and providing an alternative way to define and measure business model implementation. Conceptually, we enrich the definition of business model implementation, extending it to reflect the TMT members’ actions to specify and pursue business model goals. Methodologically, we provide another way to measure business model implementation and validate the measures empirically.

Second, we contribute to the upper-echelon literature by identifying the impact of TMT processes on business model implementation. Previous studies have largely overlooked the role of the TMT in the implementation of a new venture’s business model. We respond to scholars’ call for the study of business model implementation antecedents from the TMT perspective (Parry, 2020). Drawing upon group process theory, we propose that TMT processes play vital roles in business model implementation. In particular, we base this connection on the hypothesis that agreement seeking enhances TMT consensus formation, while interpersonal conflict diminishes TMT consensus formation; therefore, they have opposite effects on business model implementation. The results confirmed these hypotheses. Therefore, our theoretical model extends knowledge of the antecedents of business model implementation from the TMT process perspective.

Third, we extend group process theory by situating the effect of TMT processes within the organizational culture context, thereby broadening the scope of group process research to account for the environment in which the group operates. Although scholars have asserted the critical role of the environment in which the group operates in affecting the role of group processes (Knight et al., 1999), few studies have investigated the moderating role of organizational culture on group processes. In this study, we treat organizational culture (in particular, its aspects of flexibility orientation and control orientation) as a core moderator in the relationship between TMT processes and business model implementation. More importantly, we found opposite moderating effects of flexibility orientation and control orientation culture. These results highlight the necessity of treating organizational culture as a central boundary condition of TMT processes and shed new light on how the role of TMT processes may vary in different environments in which the group operates.

Implications for Practice

Our findings show that one way in which managers can improve the firm’s performance is by ensuring business model implementation. To that end, a key practical question managers may ask is how to develop the conditions necessary to ensure business model implementation. By incorporating group process theory and the organizational culture literature, we propose and confirm that effective business model implementation cannot be realized automatically; it requires abundant agreement seeking and limited interpersonal conflict among TMT members, as well as the establishment of a high flexibility orientation culture and a low-control orientation culture to foster the implementation of the business model. As a result, we offer various methods in which managers enable the conditions whereby TMT members share a collective consensus to implement their business model and ultimately improve firm performance.

The business model implementation is inherently multifaceted. Therefore, managers should utilize multiple practices at the TMT and firm level to enable both business model implementation and superior firm performance. First, agreement seeking should be encouraged by means such as establishing mutual accountability to improve TMT members’ consensus on the firm’s business model goals and monitoring progress to achieve these goals. Second, interpersonal conflict hinders business model implementation, so it is necessary to take appropriate measures to handle interpersonal conflict when it emerges in the TMT, such as avoidance, collaboration, and third-party involvement (Parayitam et al., 2010). Third, new venture leaders should pay attention to nurturing a flexibility orientation culture, rather than a control orientation culture, by encouraging employee empowerment and creative freedom that enable business model implementation (Khazanchi et al., 2007). Combining TMT processes with a focus on a flexibility orientation culture assists leaders in ensuring business model implementation and subsequently benefits the improvement of firm performance.

Limitations and Future Research

Although we provide new insights into emerging research on business model implementation, this study has limitations that future work can consider. First, we use a sample of Chinese new technology-based ventures to test the hypotheses, which limits the generalizability of our conclusions. Future research that compares differences with other industries would extend this work.

Second, our study primarily focuses on the process of implementing a firm’s business model rather than the actual outcome. To ensure that the measurement of business model implementation can accurately match its definition in this study, we applied a stringent operationalization process for item development to improve the validity of the scales. However, we acknowledge that the indicators used to measure the implementation process may not completely reflect the actual implementation outcome due to the limitations of survey-based research. As such, future research could employ text analysis of company annual reports or use corporate operational data to measure business model implementation.

Third, this study focused only on the firm’s top managers and neglected the important role of other internal actors (e.g., middle managers) and external actors (e.g., external advisors) who affect business model implementation. Research has unveiled their impact on organizations (Heyden et al., 2018; Raes et al., 2011; Van Doorn et al., 2022). For example, Heyden et al. (2017) suggested that the implementation of business decisions occurs at the interfaces between executive team members and middle managers. While such actors are beyond the scope of this study, they may well impact business model implementation. Future studies investigating the role of managerial interfaces such as the CEO-TMT interface and top management-middle management interface (Heyden et al., 2017; Van Doorn et al., 2022) could provide additional insights for understanding the process of business model implementation.

Fourth, this study focuses on the impact of agreement seeking and interpersonal conflict on business model implementation since they have been widely regarded as the two key group processes that can effectively reflect the agreement and disagreement within a TMT (Knight et al., 1999; Parayitam et al., 2010) and may play important roles in business model implementation (Leih et al., 2015; Parry, 2020). Despite this, the literature has proposed several other group processes, such as task involvement and negative socioemotional behaviors (Baysinger et al., 2014). Further research on their potential impact on business model implementation should provide a more comprehensive understanding of the role of group processes in the implementation of business models.

Fifth, while this study represents the initial attempt to examine how organizational culture influences the link between TMT processes and business model implementation, one potential limitation relates to the complexity of organizational culture. Although flexibility-control orientation is a representative classification of organizational culture, future work might consider other classifications, such as market, adhocracy, clan, and hierarchical culture (Deshpandé et al., 1993). Therefore, although we confirm the value of exploring the moderating effect of a firm’s organizational culture on the link between TMT processes and business model implementation, further research would benefit by examining other types of organizational culture.

Finally, the measurement of firm performance in this study is subjective rather than objective, which may cause potential informant bias and random errors (Liu et al., 2016). These arise because most of the companies we surveyed are not listed companies, and they are reluctant to share financial data since it involves trade secrets. Future research should apply objective measures of firm performance, such as return on assets and return on sales, to enhance the robustness of the research results.

Conclusion

The driving question in the interface between entrepreneurship and business model research is how the TMT plays a role in new ventures’ business model implementation. We endeavor to answer this question by incorporating group process theory and the organizational culture literature to investigate the relationship between TMT processes and business model implementation and the moderating role of organizational culture in such relationships. Our findings provide empirical support for theoretical propositions linking TMT process antecedents, organizational culture, and business model implementation. We also offer guidelines that to ensure effective business model implementation, new ventures should encourage TMT agreement seeking, diminish TMT interpersonal conflict, and establish a culture with high flexibility orientation and low-control orientation, which will, in turn, improve firm performance.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by the National Natural Science Foundation of China (NSFC: 72072168, 72332007, and 72001155); the Fundamental Research Funds for the Central Universities (WK2040000065).

ORCID iDs

Along Liu

Jibao Gu

Chenglin Jin

Notes

Author Biographies

Along Liu is an assistant professor in the School of Management at the University of Science and Technology of China. His research interest focuses on strategic management, entrepreneurship, and marketing. His research has been published in Industrial Marketing Management, Technological Forecasting & Social Change, and R&D Management.

Hefu Liu is a professor in the School of Management at the University of Science and Technology of China. He earned his PhD with the University of Science and Technology of China and City University of Hong Kong. He has published in MIS Quarterly, Journal of Operations Management, Decision Sciences, Decision Support Systems, Information and Management, International Journal of Operations and Production Management, and in the academic conference ICIS, PACIS, and AMCIS.

Jibao Gu is a professor in the School of Management at the University of Science and Technology of China. He earned his PhD with the University of Science and Technology of China. His research has been published in Journal of Operations Management, Decision Support Systems, International Journal of Production Research, Industrial Marketing Management, and other journals.

Meng Chen is an assistant professor in the International Institute of Finance, School of Management at the University of Science and Technology of China. His research interests include IT business value, supply chain integration, and innovation management. He has published in International Journal of Operations and Production Management, International Journal of Production Economics, Information and Management, Industrial Marketing Management, Journal of Business Research, and other journals.

Chenglin Jin is a PhD candidate of the University of Science and Technology of China. His research interest focuses on the interface of innovation management and strategic management. He has completed three working papers, and one of them is has been published in Technological Forecasting & Social Change.

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